The Commission tasked with looking at transportation needs and revenues over the next ten years is finishing work on its report early in hopes of having it available for the Governor’s consideration in advance of introducing the 2013-15 biennial budget bill.

The Wisconsin Commission on Transportation Finance and Policy was created in the 2011-2013 budget (2011 WI Act 32). The legislation directed the Commission to examine issues related to the future of transportation finance in Wisconsin, including:

• Highway maintenance, rehabilitation and expansion projects
• Local aid and assistance programs, including general transportation aids (GTA)
• Transportation fund revenue projections
• Transportation fund debt service
• Options to achieve balance between revenues, expenditures and debt service
• Impact of highway project planning on abutting property

The Commission is comprised of eleven members, representing various transportation and state/local government perspectives, including DOT Secretary, Mark Gottlieb, who participates as a non-voting member. Extensive staff work has been provided by DOT.

The Commission has looked extensively at a range of transportation issues over the past year. In general, they began with the current state of affairs (current revenues and expenditures) ––– then looked at future transportation needs (10 year outlook) under various scenarios in relation to projected revenues over the same 10 year period ––– followed by a review of various revenue and fee alternatives to generate the supplemental support for transportation needed to fill a funding gap that would otherwise enlarge over the foreseeable future.

Current 2011-13 Transportation Budget

The current transportation budget is $6.5 billion over the two-year budget cycle and includes multiple funding sources: $3.66 billion in gas tax and registration fees; $1.7 billion in federal funds; $765 million in bond funds; and, $433 million in other funds, including general fund supplemental support and local revenue.

10 Year Projections

Transportation funding needs identified by the Commission using four separate infrastructure maintenance scenarios range from $27 billion to $42 billion.

• Scenario 1 – Disinvestment: factors no change in state, federal and bond funding, which results in 23% decline in current purchasing power by the FY 22-23 biennium. (Projected cost of $27 billion over 10 years.)
• Scenario 2 – Preservation: preserves current infrastructure conditions across all modes of transportation, preserves current service levels for transit and passenger rail and puts Major Highway and SE and other state highway capacity projects on hold. (Projected cost of $30.8 billion over 10 years.)
• Scenario 3 – Capacity Management: preserves current infrastructure, implements state highway capacity expansion projects and keeps miles of congestion stable, and improves state highway maintenance service levels. (Projected cost of $40.3 billion over 10 years.)
• Scenario 4 – Multi-Model Enhancements: keeps state and local highway programs at the same levels as scenario 3, increases transit service levels and support for operations and capital funding, improves the infrastructure condition of the rail system and commercial ports, and implements aviation initiatives. (Projected cost of $42.1 billion over 10 years.)

Revenue projections under various scenarios over the same period range from $23.8 to $26.8 billion. An average of the various scenarios vs. revenue shows a $9 billion shortfall over the 10-year cycle.

Alternative Revenues and Fees

The Commission has reviewed a variety of revenue alternatives, including: increasing the sales tax on motor vehicle fuel and possibly indexing it and adding on a catch-up (currently 30.9 cent per gallon tax last increased April 2006), sales tax on motor vehicles and parts, assessment on oil company gross receipts, transfer of general fund taxes (GPR), value based vehicle registration fees (currently $75 per vehicle, last increased Jan. 2008), and Vehicle Miles Traveled (VMT).

With the exception of VMT, these are not necessarily new supplemental revenue ideas and each has their own set of political and fiscal pros and cons (For example, the fuel tax, which currently provides the largest percentage of transportation funding, becomes less able to cover the cost of wear on infrastructure as vehicles become more fuel efficient yet travel the same amount or more.). VMT has been extensively reviewed by the Commission and has been approached to analyze whether a VMT fee could replace the state motor fuel tax as the primary revenue source for transportation. The Commission’s policy review has also explored implementation issues and user concerns.

Whether the Commission’s ultimate report and recommendations compel the Governor’s, support, and/or that of the Legislature, remains to be seen. At a minimum, the Commission report is likely to frame the discussion this coming budget. They have also catalogued an impressive set of study materials that go to the heart of the current core question ––– How do we best maintain and enhance our transportation infrastructure in the face of an eroding revenue base over the foreseeable future?